Clearing and Settlement Regulations - 日本取引所 ... · The settlement of index futures...

(Reference Translation)Clearing and Settlement Regulations

1DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese version. In cases where any differences occur between the English version and the original Japanese version, the Japanese version shall prevail. Osaka Exchange, Inc., Japan Exchange Group, Inc., and/or their affiliates shall individua lly or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding with regard to this translation.

Clearing and Settlement Regulations(As of February 13, 2018)

Osaka Exchange, Inc.

Chapter 1

General Provisions

Rule 1. Purpose

1. These Regulations stipulate necessary matters concerning clearing and settlement of market

transactions of derivatives on the markets of Osaka Exchange, Inc. (hereinafter referred to as

"OSE") (meaning the financial instruments exchange markets established by OSE; the same

shall apply hereinafter) in accordance with the provisions of Rule 2, Paragraph 2 of the

Business Regulations.

2. Any amendments to these Regulations shall be made by resolution of the Board of Directors;

provided, however, that this shall not apply in cases of minor amendments.

Rule 2. Definitions of Terms

1. For the purposes of these Regulations, the meanings of the terms relating to government bond

futures transactions (meaning transactions enumerated in Article 2, Paragraph 21, Item 1 of the

Financial Instruments and Exchange Act (Act No. 25 of 1948; hereinafter referred to as the

"Act") pertaining to the standardized government bonds or transactions enumerated in Item 2 of

the same paragraph pertaining to prices of such standardized government bonds; the same shall

apply hereinafter) shall be as prescribed in the Business Regulations and the Special Rules for

Business Regulations and Brokerage Agreement Standards Relating to the J-NET Market

(hereinafter referred to as the "J-NET Special Rules), unless otherwise prescribed in these

Regulations.

2. For the purposes of these Regulations, the meanings of the terms relating to index futures

transactions (meaning transactions enumerated in Article 2, Paragraph 21, Item 2 of the Act that

relates to an index) shall be as prescribed in the Business Regulations and the J-NET Special

Rules, unless otherwise prescribed in these Regulations.

3. For the purposes of these Regulations, the meanings of the terms relating to securities options

transactions (meaning transactions enumerated in Article 2, Paragraph 21, Item 3 of the Act that

relates to transactions in securities; the same shall apply hereinafter) (excluding the terms used

regarding transactions in securities) shall be as prescribed in the Business Regulations and the

J-NET Special Rules, unless otherwise prescribed in these Regulations.

4. For the purposes of these Regulations, the meanings of the terms relating to government bond



futures options transactions (except for terms used for government bond futures transactions)

(meaning transactions enumerated in Article 2, Paragraph 21, Item 3 of the Act; the same shall

apply hereinafter) shall be as prescribed in the Business Regulations and the J-NET Special Rules,

unless otherwise prescribed in these Regulations.

5. For the purposes of these Regulations, the meanings of the terms relating to index options

transactions (meaning, among those enumerated in Article 2, Paragraph 21, Item 3 of the Act,

transactions (limited to transactions relating to indices) prescribed in the Business Regulations as

those equivalent to transactions enumerated in Item 2 of the same paragraph; the same shall apply

hereinafter) shall be as prescribed in the Business Regulations and the J-NET Special Rules,

unless otherwise prescribed in these Regulations.

6. The meaning of terms relating to the Exchange-FX Margin Transactions (meaning those relating

to the price of currency among the transactions enumerated in Article 2, Paragraph 21, Item 2 of

the Act; hereinafter referred to as "Exchange-FX Transaction") used in these Rules shall be

prescribed in the Special Rules for Business Regulations and Brokerage Agreement Standards

relating to Exchange-FX Margin Transactions (hereinafter referred to as "Special Rules for

Exchange-FX Transactions").

7. For the purposes of these Regulations, the meanings of the terms relating to Trading Participants

shall be as prescribed in the Trading Participant Regulations, unless otherwise prescribed in these

Regulations.

8. For the purposes of these Regulations, the meanings of the terms relating to cross margining

shall be as prescribed in the Business Rules of Japan Securities Clearing Corporation (hereinafter

referred to as "JSCC"), unless otherwise prescribed in these Regulations.

Rule 3. Designation of Party to Conduct Financial Instruments Obligation Assumption

Business

OSE shall designate JSCC as the financial instruments clearing organization that conducts

financial instruments obligation assumption business in relation to market transactions of

derivatives that are executed on the OSE markets.

Chapter 2

Settlement by Clearing Participants

Rule 4. Settlement by Clearing Participants

1. The settlement of government bond futures transactions and government bond futures options

transactions executed on the OSE markets shall be carried out between Government Bond

Futures, etc. Clearing Participants (meaning a party with Government Bond Futures, etc.

Clearing Qualification (meaning the JGB Futures Clearing Qualification prescribed in the



Business Rules of JSCC; the same shall apply hereinafter); the same shall apply hereinafter) and

JSCC as prescribed in the Business Rules of JSCC.

2. The settlement of index futures transactions, securities options transactions, and index options

transactions executed on the OSE markets shall be carried out between Index Futures, etc.

Clearing Participants (meaning a party with Index Futures Clearing Qualification (meaning the

Index Futures Clearing Qualification prescribed in the Business Rules of JSCC; the same shall

apply hereinafter); the same shall apply hereinafter) and JSCC as prescribed in the Business

Rules of JSCC.

3. The settlement of Exchange-FX Transactions executed on the OSE markets shall be carried out

between FX Clearing Participants (meaning a party with FX Clearing Qualification (meaning the

FX Clearing Qualification prescribed in the Business Rules of JSCC; the same shall apply

hereinafter); the same shall apply hereinafter) and JSCC as stipulated in the Business Rules of

JSCC.

Chapter 3

Settlement between Non-Clearing Participants and Clearing Participants

Section 1

Settlement of Government Bond Futures Transactions

Rule 4-2. Notification of Close-out Quantity, etc.

1. For each contract month of government bond futures, a Government Bond Futures, etc.

Non-Clearing Participant (see Note 1 below) shall notify its Designated Government Bond

Futures, etc. Clearing Participant (see Note 2 below) of the close-out quantity (meaning, when

having long positions based on entrustment of brokerage for clearing of securities, etc.

(hereinafter referred to as "Clearing Brokerage Long Positions") and short positions based on

entrustment of brokerage for clearing of securities, etc. (hereinafter referred to as "Clearing

Brokerage Short Positions") for any one issue at the same time and settling such positions in

whole or part (excluding those by resale or repurchase), the quantity of such settled positions; the

same shall apply hereinafter) and the quantity of resale and repurchase in the event that a resale

pertaining to Clearing Brokerage Long Positions or a repurchase pertaining to Clearing

Brokerage Short Positions is executed, for each account managed by the Designated Government

Bond Futures, etc. Clearing Participant prescribed in the Business Rules of JSCC, no later than

the cut-off time specified by such Designated Government Bond Futures, etc. Clearing

Participant that is before the cut-off time specified by JSCC; provided, however, that this shall

not apply in cases where such Designated Government Bond Futures, etc. Clearing Participant

understands the details to be notified, or such Government Bond Futures, etc. Non-Clearing



Participant has made such notification to JSCC pursuant to the rules of JSCC.

(Note 1) A Government Bond Futures, etc. Non-Clearing Participant means a Government

Bond Futures, etc. Non-Clearing Participant prescribed in Rule 24, Paragraph 2 of the

Trading Participant Regulations; the same shall apply hereinafter.

(Note 2) A Designated Government Bond Futures, etc. Clearing Participant means a

Government Bond Futures, etc. Agency Clearing Participant (meaning a party with

Agency Clearing Qualification pertaining to Government Bond Futures, etc. Clearing

Qualification (meaning the JGB Futures Clearing Qualification prescribed in the

Business Rules of JSCC)) designated by such Government Bond Futures, etc.

Non-Clearing Participant pursuant to the provisions of Rule 27, Paragraph 1 of the

Trading Participant Regulations; the same shall apply hereinafter.

2. Where a Government Bond Futures, etc. Non-Clearing Participant has made the notification

specified in the preceding paragraph, OSE shall receive from JSCC a notice of the close-out

quantity and the resale and repurchase quantity pertaining to such notification.

Rule 4-3. Settlement Price of Government Bond Futures Trading

The settlement price of government bond futures transactions (in the case of mini contracts, the

numerical value that is the settlement price) shall be the price specified by JSCC as the settlement

price of government bond futures transactions (in the case of mini contracts, the numerical

value).

Rule 4-4. Payment/Receipt of Amount of Difference between Contract Price and Settlement

Price

With respect to government bond futures transactions (including transactions for error correction,

etc.; the same shall apply hereinafter) based on entrustment of brokerage for clearing of securities,

etc., where there is an amount of difference as a result of comparison between the contract price

(meaning, in the case of mini contracts, the numerical value that is the contract price; the same

shall apply in this section) and the settlement price on the trading day of the contract, a

Government Bond Futures, etc. Non-Clearing Participant must pay to or receive from the

Designated Government Bond Futures, etc. Clearing Participant the amount of money equivalent

to such difference. In this case, the paying Government Bond Futures, etc. Non-Clearing

Participant shall pay to the Designated Government Bond Futures, etc. Clearing Participant the

amount of money equivalent to such difference no later than the date and time designated by the

Designated Government Bond Futures, etc. Clearing Participant that is before the settlement

cut-off time specified by JSCC.



Rule 4-5. Payment/Receipt of Amount of Difference between Settlement Prices

With respect to government bond futures transactions based on entrustment of brokerage for

clearing of securities, etc., where there is an amount of difference as a result of comparison

between the settlement price on the trading day and the settlement price on the preceding trading

day, a Government Bond Futures, etc. Non-Clearing Participant shall pay to or receive from the

Designated Government Bond Futures, etc. Clearing Participant the amount of money equivalent

to such difference. In this case, the paying Government Bond Futures, etc. Non-Clearing

Participant must pay the amount of money equivalent to such difference to the Designated

Government Bond Futures, etc. Clearing Participant no later than the date and time designated by

the Designated Government Bond Futures, etc. Clearing Participant that is before the settlement


Rule 4-6. Deleted.

Rule 4-7. Government Bonds to be Delivered/Received and Money to Be Paid/Received for

Settlement by Delivery/Payment

The quantity of government bonds to be delivered/received and the amount of money to be

paid/received between a Government Bond Futures, etc. Non-Clearing Participant and the

Designated Government Bond Futures, etc. Clearing Participant for settlement of large contracts

shall be as specified in the provisions of each of the following items:

(1) The quantity of government bonds shall be the difference between the final Clearing

Brokerage Short Positions and the final Clearing Brokerage Long Positions; and

(2) The amount of money shall be the amount of the consideration for settlement by

delivery/payment with respect to deliverable bonds pertaining to a net quantity of

government bonds as prescribed in the provisions of the preceding item.

Rule 4-8. Delivery Cut-off Time for Settlement by Delivery/Payment

For settlement of large contracts by delivery/payment, a Government Bond Futures, etc.

Non-Clearing Participant shall deliver government bonds it has sold or pay the amount of its

purchase consideration to the Designated Government Bond Futures, etc. Clearing Participant no

later than the date and time designated by the Designated Government Bond Futures, etc.

Clearing Participant that is before the settlement cut-off time specified by JSCC.

Rule 4-9. Combination of Securities of Deliverable Grade

Securities of deliverable grades for settlement of large contracts pertaining to settlement by

delivery/payment may be combined in integral multiples of the trading unit per deliverable bond



as selected by the delivering Government Bond Futures, etc. Non-Clearing Participant.

Rule 4-10. Notification of Securities of Deliverable Grade

A delivering Government Bond Futures, etc. Non-Clearing Participant shall notify the Designated

Government Bond Futures, etc. Clearing Participant of the issue and quantity provided for

settlement of large contracts by delivery/payment by the date and time designated by the

Designated Government Bond Futures, etc. Clearing Participant by deeming it necessary to effect

settlement by delivery/payment.

Rule 4-11. Postponement of Settlement Pertaining to Settlement by Delivery/Payment

In the event that a Government Bond Futures, etc. Non-Clearing Participant is unable to deliver

government bonds for settlement of large contracts by delivery/payment by the cut-off time for

settlement by delivery/payment as prescribed in the provisions of Rule 4-8, and, in addition, that

it has obtained approval of the Designated Government Bond Futures, etc. Clearing Participant,

such Government Bond Futures, etc. Non-Clearing Participant may postpone the delivery of

government bonds pertaining to such settlement by delivery/payment to the following day or

thereafter pursuant to the provisions prescribed by OSE.

Rule 4-12. Payment/Receipt of Money for Final Settlement

In the event that there is a difference as a result of comparison between the final settlement price

and the settlement price as of the last trading day with respect to the final settlement of mini

contracts, a Government Bond Futures, etc. Non-Clearing Participant shall pay to or receive from

the Government Bond Futures, etc. Clearing Participant the amount of money equivalent to such

difference. In this case, a paying Government Bond Futures, etc. Non-Clearing Participant shall

pay such amount to the Designated Government Bond Futures, etc. Clearing Participant no later

than the date and time designated by the Designated Government Bond Futures, etc. Clearing

Participant that is before the settlement cut-off time specified by JSCC.

Rule 4-12-2. Special Provisions for Payment/Receipt of Money Pertaining to Remote Trading

Participant

1. If a Remote Trading Participant has agreed in advance with its customer (limited to those who

belong to the same corporate group (meaning the corporate group prescribed in Article 5,

Paragraph 1, Item 2 of the Act; the same shall apply hereinafter) as the Remote Trading

Participant; the same shall apply hereinafter in this rule through Rule 14-2-4) and its Designated

Clearing Participant, it will be able to make the customer and the Designated Clearing Participant

pay/receive/deliver money (hereinafter referred to as "payment/receipt, etc. of money" in this rule

and Rule 4-12-4) prescribed in Rule 4-4, Rule 4-5 and the preceding rule pertaining to trades



entrusted by the customer.

2. If such a customer has made payment/receipt, etc. of money to/from the Designated Clearing

Participant pursuant to the provisions of the preceding paragraph, such payment/receipt, etc. of

money shall be deemed as the payment/receipt, etc. of money pursuant to the provisions of Rule

4-4, Rule 4-5 and the preceding rule.

Rule 4-12-3. Special Provisions for Settlement by Delivery/Payment Pertaining to Remote

Trading Participant

1. If a Remote Trading Participant has agreed in advance with its customer and Designated Clearing

Participant, it will be able to make the customer and the Designated Clearing Participant conduct

settlement by delivery/payment in large contracts entrusted by the customer according to the

provisions of Rule 4-7 through Rule 4-11.

2. If such a customer has conducted settlement by delivery/payment with the Designated Clearing

Participant pursuant to the provisions of the preceding paragraph, it shall be deemed that the

settlement by delivery/payment has been conducted between the Remote Trading Participant and

the Designated Clearing Participant.

Rule 4-12-4. Understanding Status of Payment/Receipt, etc. of Money Pertaining to Customer

of Remote Trading Participant

A Remote Trading Participant that has agreed to the terms in Rule 4-12-2, Paragraph 1, or

Paragraph 1 of the preceding rule must establish an arrangement to understand the status of

payment/receipt, etc. of money or settlement by delivery/payment between the customer and the

Designated Clearing Participant pertaining to the agreement.

Section 1-2

Cross Margining

Rule 4-13. Offer pertaining to Application for Cross Margining, etc.

1. In cases where a Government Bond Futures, etc. Non-Clearing Participant is a cross margining

user and intends to make the whole or part of the position for government bond futures

transactions for its own account subject to cross margining, it may, as specified by OSE, make an

offer pertaining to the application for making the position for government bond futures

transactions for its own account subject to cross margining to its Designated Government Bond

Futures, etc. Clearing Participant by the date and time specified by the Designated Government

Bond Futures, etc. Clearing Participant.

2. In cases where a customer of a Government Bond Futures, etc. Non-Clearing Participant is a



cross margining user and the Government Bond Futures, etc. Non-Clearing Participant has

received an offer pertaining to the application for cross margining from the customer, the

Government Bond Futures, etc. Non-Clearing Participant may, as specified by OSE, conduct the

brokerage for the offer pertaining to the application for making the position for government bond

futures transactions for the said customer's account subject to cross margining by the date and

time specified by the Designated Government Bond Futures, etc. Clearing Participant.

3. Notwithstanding the provisions of the preceding two paragraphs, in the event that a Designated

Government Bond Futures, etc. Clearing Participant may not apply for cross margining as

specified by JSCC, a Government Bond Futures, etc. Non-Clearing Participant may not make an

offer or conduct the brokerage for an offer pertaining to the application for cross margining to the

Designated Government Bond Futures, etc. Clearing Participant.

Rule 4-14. Application of Interest Rate Swap Clearing Business Rules Concerning JGB

Futures Position Transfer, etc.

1. A JGB Futures Position Transfer by a Government Bond Futures, etc. Non-Clearing Participant or

its customer, either of which is a cross margining user, shall be as prescribed in the Interest Rate

Swap Clearing Business Rules of JSCC.

2. The designation of a JGB Futures Backup Clearing Broker by a Government Bond Futures, etc.

Non-Clearing Participant or its customer, either of which is a cross margining user, shall be as

prescribed in the Interest Rate Swap Clearing Business Rules of JSCC.

Section 1-3

Settlement of Index Futures Transactions

Rule 5. Notification of Close-out Quantity, etc.

1. For each contract month of index futures, an Index Futures, etc. Non-Clearing Participant (see

Note 1 below) shall notify its Designated Index Futures, etc. Clearing Participant (see Note 2

below) of the close-out quantity and the quantity of resale and repurchase in the event that a

resale pertaining to Clearing Brokerage Long Positions or a repurchase pertaining to Clearing

Brokerage Short Positions is executed, for each account managed by the Designated Index

Futures, etc. Clearing Participant prescribed in the Business Rules of JSCC, no later than the

cut-off time specified by such Designated Index Futures, etc. Clearing Participant that is before

the cut-off time specified by JSCC; provided, however, that this shall not apply in cases where

such Designated Index Futures, etc. Clearing Participant understands the details to be notified,

or such Index Futures, etc. Non-Clearing Participant has made such notification to JSCC

pursuant to the rules of JSCC.



(Note 1) An Index Futures, etc. Non-Clearing Participant means an Index Futures, etc.

Non-Clearing Participant prescribed in Rule 24, Paragraph 3 of the Trading

Participant Regulations; the same shall apply hereinafter.

(Note 2) A Designated Index Futures, etc. Clearing Participant means an Index Futures, etc.

Agency Clearing Participant (meaning a party with Agency Clearing Qualification

pertaining to Index Futures Clearing Qualification (meaning the Index Futures

Clearing Qualification prescribed by the Business Rules of JSCC)) designated by

such Index Futures, etc. Non-Clearing Participant pursuant to Rule 27, Paragraph 1 of

the Trading Participant Regulations; the same shall apply hereinafter.

2. Where an Index Futures, etc. Non-Clearing Participant has made the notification specified in the

preceding paragraph, OSE shall receive from JSCC a notice of the close-out quantity and the

resale and repurchase quantity pertaining to such notification.

Rule 6. Settlement Price

The settlement price of index futures transactions shall be the price specified by JSCC as the

settlement price of index futures transactions.

Rule 7. Payment/Receipt of Money equivalent to Difference between Contract Price and

Settlement Price

With respect to index futures transactions (including transactions for error correction, etc.; the

same shall apply hereinafter) based on entrustment of brokerage for clearing of securities, etc.,

where there is an amount of difference as a result of comparison between the contract price and

the settlement price on the day of the contract, an Index Futures, etc. Non-Clearing Participant

must pay to or receive from the Designated Index Futures, etc. Clearing Participant the amount of

money equivalent to such difference. In this case, the paying Index Futures, etc. Non-Clearing

Participant must pay to the Designated Index Futures, etc. Clearing Participant the amount of

money equivalent to such difference no later than the date and time designated by the Designated

Index Futures, etc. Clearing Participant that is before the settlement cut-off time specified by

JSCC.

Rule 8. Payment/Receipt of Amount of Difference between Settlement Prices

With respect to index futures transactions based on entrustment of brokerage for clearing of

securities, etc., where there is an amount of difference as a result of comparison between the

settlement price as of the trading day and the settlement price as of the preceding trading day, an

Index Futures, etc. Non-Clearing Participant shall pay to or receive from the Designated Index

Futures, etc. Clearing Participant the amount of money equivalent to such difference. In this case,

the paying Index Futures, etc. Non-Clearing Participant must pay the amount of money



equivalent to such difference to the Designated Index Futures, etc. Clearing Participant no later

than the date and time designated by the Designated Index Futures, etc. Clearing Participant that

is before the settlement cut-off time specified by JSCC.

Rule 9. Payment/Receipt of Money for Final Settlement

In the event that there is a difference as a result of comparison between the final settlement price

and the settlement price as of the last trading day, an Index Futures, etc. Non-Clearing Participant

shall pay to or receive from the Designated Index Futures, etc. Clearing Participant the amount of

money equivalent to such difference on the final settlement date. In this case, the paying Index

Futures, etc. Non-Clearing Participant must pay the money to the Designated Index Futures, etc.

Clearing Participant no later than the date and time designated by such Designated Index Futures,

etc. Clearing Participant that is before the settlement cut-off time specified by JSCC.

Rule 9-2. Special Provisions for Payment/Receipt of Money Pertaining to Remote Trading

Participant


belong to the same corporate group as the Remote Trading Participant; the same shall apply

hereinafter in this rule and the following rule) and its Designated Clearing Participant, it will be

able to make the customer and the Designated Clearing Participant pay/receive/deliver money

(hereinafter referred to as "payment/receipt, etc. of money" in this rule and the following rule)

prescribed in Rule 7 through Rule 9 pertaining to trades entrusted by the customer.

2. If such a customer has made payment/receipt, etc. of money to/from the Designated Clearing

Participant, such payment/receipt, etc. of money shall be deemed as the payment/receipt, etc. of

money pursuant to the provisions from Rule 7 through Rule 9.

Rule 9-3. Understanding Status of Payment/Receipt, etc. of Money Pertaining to Customer of

Remote Trading Participant

A Remote Trading Participant that has agreed to the terms in Paragraph 1 of the preceding rule

must establish an arrangement to understand the status of payment/receipt, etc. of money between

the customer and the Designated Clearing Participant pertaining to the agreement.

Section 2

Settlement of Securities Options Transactions


1. For each issue of securities options, an Index Futures, etc. Non-Clearing Participant shall notify



its Designated Index, etc. Futures Clearing Participant of the close-out quantity and the quantity

of resale and repurchase in the event that a resale pertaining to Clearing Brokerage Long

Positions or a repurchase pertaining to Clearing Brokerage Short Positions is executed, for each

account managed by the Designated Index Futures, etc. Clearing Participant prescribed in the

Business Rules of JSCC, no later than the cut-off time specified by such Designated Index

Futures, etc. Clearing Participant prescribed in the Business Rules of JSCC that is before the

cut-off time specified by JSCC; provided, however, that this shall not apply in cases where such

Designated Index Futures, etc. Clearing Participant understands the details to be notified, or such

Index Futures, etc. Non-Clearing Participant has made such notification to JSCC pursuant to the

rules of JSCC.

2. Where an Index Futures, etc. Non-Clearing Participant has made the notification specified in the

preceding paragraph, OSE shall receive from JSCC a notice of the close-out quantity and the

resale and repurchase quantity pertaining to such notification.

Rule 11. Payment/Receipt of Option Premium

Where a securities options transaction based on entrustment of brokerage for clearing of

securities, etc. (including transactions for error correction, etc.; the same shall apply hereinafter)

is effected, an Index Futures, etc. Non-Clearing Participant shall pay to or receive from the

Designated Index Futures, etc. Clearing Participant the option premium. In this case, the paying

Index Futures, etc. Non-Clearing Participant must pay money to the Designated Index Futures,

etc. Clearing Participant no later than the date and time designated by such Designated Index

Futures, etc. Clearing Participant that is before the settlement cut-off time specified by JSCC.

Rule 12. Notification of Exercise of Options

1. The exercise of securities options for Clearing Brokerage Long Positions of securities options

transactions shall be executed by notification of an Index Futures, etc. Non-Clearing Participant

to the Designated Index Futures, etc. Clearing Participant of the quantities pertaining to the

exercise of options for each issue, classifying them into agency and proprietary accounts, no later

than the cut-off time designated by the Designated Index Futures, etc. Clearing Participant that is

before the cut-off time specified by JSCC; provided, however, that this shall not apply in cases

where a customer has made the notification to the Designated Index Futures, etc. Clearing

Participant pursuant to the provisions of Rule 14-2, Paragraph 1 of the Brokerage Agreement

Standards, or an Index Futures, etc. Non-Clearing Participant makes such notification to JSCC

pursuant to the rules of JSCC.

2. With respect to an issue which falls under each of the following items on the exercise day, even

where notification of the exercise of options has not been given by the cut-off time of such day

prescribed in the preceding paragraph, notification of such exercise of options in the preceding



paragraph shall be deemed to have been given; provided, however, that this shall not apply in

cases where a customer or an Index Futures, etc. Non-Clearing Participant notifies to that effect

that no exercise of options will be effected by such cut-off time:

(1) A securities put option whose exercise price exceeds the option reference price (meaning

the option reference price prescribed in the Business Rules of JSCC; the same shall apply

hereinafter);

(2) A securities call option whose exercise price is lower than the option reference price.

3. An Index Futures, etc. Non-Clearing Participant having no Securities Clearing Qualification

(meaning the Securities Clearing Qualification prescribed in the Business Rules of JSCC; the

same shall apply hereinafter) and designating Participant different from the Designated Index

Futures, etc. Clearing Participant as the Designated Securities Clearing Participant (meaning

Securities Agency Clearing Participant (meaning Participant having Agency Clearing

Qualification relating to Securities Clearing Qualification) designated by such Index Futures, etc.

Non-Clearing Participant pursuant to Rule 27, Paragraph 1 of the Trading Participant

Regulations; the same shall apply hereinafter in this section) must, when notification of an

exercise of options pursuant to Paragraph 1 has been made (including when it shall be deemed

that an exercise notice has been made pursuant to the preceding paragraph), so inform the

Designated Securities Clearing Participant without delay.

4. Where OSE deems it inappropriate to consider that notification of exercise of options has been

given pursuant to the provisions of the main clause of Paragraph 2 due to any malfunction in the

operation of the trading systems or any other unavoidable reason, such provisions of the main

clause in the same paragraph shall not apply.

5. In cases where an Index Futures, etc. Non-Clearing Participant gives notification of an exercise

of options specified in Paragraph 1 (including the case where it is deemed that notification of an

exercise of options is given pursuant to the provisions of Paragraph 2), OSE shall receive from

JSCC a notice of details of the exercise pertaining to such notification.

6. If a customer notifies a Designated Index Futures, etc. Clearing Participant of an exercise of

options specified in Paragraph 1 (including cases where an exercise of options deems to have

been notified pursuant to the provisions of Paragraph 2 and notification has been made that

options will not be exercised) pursuant to the provisions of Rule 14-2, Paragraph 1 of Brokerage

Agreement Standards, a Remote Trading Participant must establish an arrangement to understand

the status of notification of exercise of options by the customer.

Rule 13. Notice concerning Assignment of Exercise of Options

1. Where JSCC assigns exercise of options pertaining to Clearing Brokerage Short Positions as

specified by JSCC, OSE shall receive from JSCC a notice of details pertaining to such

assignment.



2. An Index Futures, etc. Non-Clearing Participant having no Securities Clearing Qualification and

designating a party other than a Designated Index Futures, etc. Clearing Participant as the

Designated Securities Clearing Participant must, when it receives an assignment of exercises of

options pertaining to Clearing Brokerage Short Positions pursuant to the provisions of JSCC,

notify to that effect to the Designated Securities Clearing Participant without delay.

Rule 14. Handling of Transactions in Underlying Securities Resulting from Exercise

In the event that transactions in underlying securities executed as a result of the exercise of

securities options transactions pertain to Clearing Brokerage Short Positions or Clearing

Brokerage Long Positions, these Regulations shall apply to such transactions in underlying

securities executed as result of the exercise by deeming that such transactions are executed based

on entrustment of brokerage for clearing of securities, etc.

Rule 15. Settlement Cut-off Time for Exercise of Options

With respect to transactions in underlying securities executed as a result of exercise, the

settlement shall be made at the cut-off time specified by JSCC in cases where an Index Futures,

etc. Non-Clearing Participant has Securities Clearing Qualification, and an Index Futures

Non-Clearing Participant shall deliver the securities to be transferred and the money to be paid to

the Designated Securities Clearing Participant no later than the time and date designated by such

Designated Securities Clearing Participant that is before the settlement cut-off time stipulated by

JSCC in cases where the Index Futures, etc. Non-Clearing Participant has no Securities Clearing

Qualification.

Rule 16. Delivery where DVP Settlement is Used

1. In the event that DVP settlement pursuant to the Business Rules of the JASDEC DVP Clearing

Corporation ("JDCC") is to be used by agreement between an Index Futures, etc. Non-Clearing

Participant that has no Securities Clearing Qualification (hereinafter referred to as "Securities

Non-Clearing Participant) and the Designated Securities Clearing Participant in underlying

securities executed as a result of exercise, the Securities Non-Clearing Participant shall transfer

the securities or pay the money to the JDCC no later than the settlement cutoff time stipulated by

the JDCC (for the transfer of securities, this shall be a date and time designated by the

Designated Securities Clearing Participant at the time of the agreement that is before the

settlement cut-off time stipulated by JSCC).

2. In the event that a Securities Non-Clearing Participant transfers the securities or pays the money

pursuant to the provisions of the preceding paragraph, such transfer of securities or payment of

money shall be deemed as the delivery of securities or delivery of money enumerated in the

preceding rule.



Rule 17. Money and Securities to be Delivered or Received for Settlement

1. The amount of money or quantity of securities to be delivered or received between the Securities

Non-Clearing Participant and the Designated Securities Clearing Participant for the purpose of

settlement of transactions in underlying securities executed as a result of exercise shall be as

prescribed in the following item according to the classification stipulated in such item.

(1) Where the quantity of securities underlying one (1) unit of the securities option is equal

to the quantity in a trading unit of such underlying securities.

In respect of the same Securities Clearing Participant on the same settlement day, the

difference between the total amount of sales proceeds and the total amount of purchase

money, and the difference between the quantity of securities sold and the quantity of

securities purchased in respect of each issue.

(2) Where the quantity of securities underlying one (1) unit of the securities option is greater

than the quantity in a trading unit of such underlying securities.

In transactions in underlying securities executed as a result of exercise, the Securities

Non-Clearing Participant shall deliver, if it has purchased such underlying securities, the

purchase money prescribed in (a), or if it has sold such underlying securities, the money

prescribed in (b) and securities prescribed in (c).

(a) The purchase money of the transaction in underlying securities executed as a result

of exercise (the amount calculated by multiplying the result of multiplying the

exercise price by the quantity of securities underlying one (1) unit of the securities

option (rounded down in the event that a fractional amount less than one (1) yen

arises) by the quantity of the securities options exercised; the same shall apply in the

following Item).

(b) Money equivalent to the amount calculated by multiplying the result of multiplying

the quantity less than one (1) trading unit (meaning the quantity obtained by

subtracting the quantity of an integral multiple of trading units of such underlying

security from the quantity of securities underlying one (1) unit of the securities

option that falls short of such trading unit; the same shall apply hereinafter in this

Rule) by the option settlement price (rounded down in the event that a fractional

amount less than one (1) yen arises; the same shall apply in the following Item) by

the quantity of securities options exercised.

(c) The quantity of securities calculated by multiplying the quantity obtained by

subtracting the quantity less than one (1) trading unit from the quantity of securities

underlying one (1) unit of the securities option by the quantity of securities options

exercised.

(3) Where the quantity of securities underlying one (1) unit of the securities option is less



than the quantity in a trading unit of such underlying securities.

In transactions in underlying securities executed as a result of exercise, the Securities

Non-Clearing Participant shall deliver, if it has purchased such underlying securities, the

purchase money prescribed in (a), or if it has sold such underlying securities, the money

prescribed in (b).

(a) The purchase money of the transaction in underlying securities executed as a result

of exercise.

(b) Money equivalent to the amount calculated by multiplying the result of multiplying

the quantity of securities underlying one (1) unit of the securities option by the option

settlement price by the number of securities options exercised.

2. In transactions in underlying securities executed as a result of exercise, the amount of money to

be paid or received pursuant to Item 2 (b) and Item 3 (b) of the preceding paragraph shall be

included in the total purchase money prescribed in Item 1 of the preceding paragraph if the

Securities Non-Clearing Participant has sold such underlying securities, or in the total sale money

if it has purchased such underlying securities.

Rule 18. Restriction on Deliverable Securities

1. With respect to a delivery and a receipt of securities specified in the preceding rule, in cases

where both old securities and new securities have been already listed or either of them has been

already listed and the other has been determined to be listed, when the rights and obligations shall

be the same and both shall be merged to trade, the settlement that comes after such trading begins

shall be subject to the same treatment.

2. In the event that a Securities Non-Clearing Participant fails to deliver the securities by the cutoff

time specified in Rule 15 concerning transactions in the underlying securities resulting from an

exercise of options due to an unavoidable reason, it may postpone the delivery of such securities

to the following day (to be moved down if such day falls on a non-business day (meaning a

non-business day prescribed in Rule 19, Paragraph 1 including extraordinary non-business days

in Paragraph 2 of the same rule; the same shall apply hereinafter); the same shall apply

hereinafter) with an approval of the Designated Securities Clearing Participant.

Rule 18-2. Special Provisions for Payment/Receipt of Option Premium Pertaining to Remote

Trading Participant



hereinafter in this rule through Rule 18-2-3) and its Designated Index Futures, etc. Clearing

Participant, it will be able to make the customer and the Designated Index Futures, etc. Clearing

Participant pay/receive option premium and deliver money (hereinafter referred to as



"payment/receipt, etc. of option premium" in this rule and Rule 18-2-3) prescribed in Rule 11

pertaining to trades entrusted by the customer.

2. If such a customer has made payment/receipt, etc. of option premium to/from the Designated

Index Futures, etc. Clearing Participant pursuant to the provisions of the preceding paragraph,

such payment/receipt, etc. of option premium shall be deemed as the payment/receipt, etc. of

option premium pursuant to the provisions of Rule 11.

Rule 18-2-2. Special Provisions for Settlement of Trades in Underlying Securities Resulting

from Exercising Options Pertaining to Remote Trading Participant

1. If a Remote Trading Participant has agreed in advance with its customer and Designated Securities

Clearing Participant, it will be able to make the customer and the Designated Securities Clearing

Participant settle transactions in underlying securities executed as a result of the exercise of

options pertaining to trades entrusted by the customer according to the provisions of Rule 15,

Rule 17, and Rule 18.

2. If such a customer has settled transactions in underlying securities executed as a result of the

exercise of options with the Designated Securities Clearing Participant pursuant to the provisions

of the preceding paragraph, it shall be deemed that the settlement of transactions in underlying

securities executed as a result of the exercise of options has been conducted between the Remote

Trading Participant and the Designated Securities Clearing Participant.

Rule 18-2-3. Understanding Status of Payment/Receipt, etc. of Option Premium/Money

Pertaining to Customer of Remote Trading Participant

A Remote Trading Participant that has agreed to the terms in Rule 18-2, Paragraph 1 or Paragraph

1 of the preceding rule must establish an arrangement to understand the status of (i) or (ii)

pertaining to the agreement.

(i) Payment/receipt, etc. of option premium between the customer and the Designated Index

Futures, etc. Clearing Participant

(ii) Settlement of transactions in underlying securities executed as a result of the exercise of

options between the customer and the Designated Securities Clearing Participant

Section 2-2

Settlement of Government Bond Futures Options Transactions

Rule 18-2-4. Notification of Close-out Quantity, etc.

1. For each issue of government bond futures options, a Government Bond Futures, etc.

Non-Clearing Participant shall notify its Designated Clearing Participant of the close-out quantity

and the quantity of resale and repurchase in the event that a resale pertaining to Clearing



Brokerage Long Positions or a repurchase pertaining to Clearing Brokerage Short Positions is

executed, for each account managed by the Designated Government Bond Futures, etc. Clearing

Participant prescribed in the Business Rules of JSCC, no later than the cut-off time specified by

such Designated Government Bond Futures, etc. Clearing Participant that is before the cut-off

time specified by JSCC; provided, however, that this shall not apply in cases where such

Designated Government Bond Futures, etc. Clearing Participant understands the details to be

notified, or such Government Bond Futures, etc. Non-Clearing Participant has made such

notification to JSCC pursuant to the rules of JSCC.

2. Where a Government Bond Futures, etc. Non-Clearing Participant has made the notification

specified in the preceding paragraph, OSE shall receive from JSCC a notice of the close-out

quantity and the resale and repurchase quantity pertaining to such notification.

Rule 18-3. Notification of Exercise of Options

1. The exercise of options for Clearing Brokerage Long Positions of government bond futures

options transactions (including transactions for error correction, etc.; the same shall apply

hereinafter) shall be executed by notification of a Government Bond Futures, etc. Non-Clearing

Participant to a Designated Government Bond Futures, etc. Clearing Participant of the quantities

pertaining to the exercise of options for each issue, classifying them into agency and proprietary

accounts, by the cut-off time specified by the Designated Government Bond Futures, etc.

Clearing Participant that is before the settlement cut-off time specified by JSCC; provided,

however, that this shall not apply, in cases where a customer has made the notification to the

Designated Government Bond Futures, etc. Clearing Participant pursuant to the provisions of

Rule 14-2, Paragraph 1 of the Brokerage Agreement Standards, or a Government Bond Futures,

etc. Non-Clearing Participant makes such notification to JSCC pursuant to the rules of JSCC.

2. With respect to an issue which falls under any of the following items on the expiration date of

the exercise period, even where notification of the exercise of options has not been given by the

cut-off time of such day prescribed in the preceding paragraph, notification of such exercise of

options shall be deemed to have been given; provided, however, that this shall not apply in cases

where a customer or a Government Bond Futures, etc. Non-Clearing Participant notifies to the

effect that no exercise of options will be effected by such cut-off time:

(1) A government bond futures put option whose exercise price exceeds the settlement price

of the underlying government bond futures contract month on a trading day that ends on

the expiration date of the exercise period;

(2) A government bond futures call option whose exercise price is lower than the settlement

price of the underlying government bond futures contract month on a trading day that

ends on the expiration date of the exercise period.

3. Where OSE deems it inappropriate to consider that notification of exercise of options has been



given pursuant to the provisions of the main clause of the preceding paragraph due to any

malfunction in the operation of the trading systems or any other unavoidable reason, such

provisions of the main clause in the same paragraph shall not apply.

4. In cases where a Government Bond Futures, etc. Non-Clearing Participant gives notification of

an exercise of options as prescribed in Paragraph 1 (including cases where notification is deemed

to have been given pursuant to the provisions in Paragraph 2), OSE shall receive from JSCC a

notice of details about the exercise of options pertaining to such notification.

5. If a customer notifies a Designated Government Bond Futures, etc. Clearing Participant of an

exercise of options specified in Paragraph 1 (including cases where an exercise of options deems

to have been notified pursuant to the provisions of Paragraph 2 and notification has been made

that options will not be exercised) pursuant to the provisions of Rule 14-2, Paragraph 1 of the

Brokerage Agreement Standards, a Remote Trading Participant must establish an arrangement to

understand the status of notification of exercise of options by the customer.

Rule 18-4. Notice concerning Assignment of Exercise of Options

Where JSCC assigns exercise of options pertaining to Clearing Brokerage Short Positions as

specified by JSCC, OSE shall receive from JSCC a notice of details pertaining to such

assignment.

Rule 18-5. Treatment of Government Bond Futures Transactions by Exercise of Options of

Clearing Brokerage Short Positions or Long Positions

In cases where government bond futures transactions effected by an exercise of options in

government bond futures options transactions pertains to Clearing Brokerage Short Positions or

Clearing Brokerage Long Positions, these regulations shall apply by deeming that the

government bond futures transactions effected by such exercise of options has been effected

based on entrustment of brokerage for clearing of securities, etc.

Rule 18-6. Payment/Receipt of Option Premiums

Where a government bond futures options transaction based on entrustment of brokerage for

clearing of securities, etc. is effected, a Government Bond Futures, etc. Non-Clearing Participant

shall pay/receive the option premiums to/from the Designated Government Bond Futures, etc.

Clearing Participant. In this case, a paying Government Bond Futures, etc. Non-Clearing

Participant shall make payment to the Designated Government Bond Futures, etc. Clearing

Participant by the date and time specified by the Designated Government Bond Futures, etc.

Clearing Participant that is before the settlement cut-off time specified by JSCC.

Rule 18-7. Special Provisions for Payment/Receipt of Option Premium Pertaining to Remote



Trading Participant




able to make the customer and the Designated Clearing Participant pay/receipt option premium

and deliver money (hereinafter referred to as "payment/receipt, etc. of option premium" in this

rule and the following rule) pertaining to trades entrusted by the customer.

2. If such a customer has made payment/receipt, etc. of option premium to/from the Designated

Clearing Participant pursuant to the provisions of the preceding paragraph, such payment/receipt,

etc. of option premium shall be deemed as the payment/receipt, etc. of option premium pursuant

to the preceding rule.

Rule 18-8. Understanding Status of Payment/Receipt, etc. of Option Premium/Money

Pertaining to Customer of Remote Trading Participant


must establish an arrangement to understand the status of payment/receipt etc. of option premium

between the customer and the Designated Clearing Participant pertaining to the agreement.

Section 3

Settlement of Index Options Transactions


1. For each issue of index options, an Index Futures, etc. Non-Clearing Participant shall notify its

Designated Index Futures, etc. Clearing Participant of the close-out quantity and the quantity of

resale and repurchase in the event that a resale pertaining to Clearing Brokerage Long Positions

or a repurchase pertaining to Clearing Brokerage Short Positions is executed, for each account

managed by the Designated Index Futures, etc. Clearing Participant prescribed in the Business

Rules of JSCC, no later than the cut-off time specified by such Designated Index Futures, etc.

Clearing Participant that is before the cut-off time specified by JSCC; provided, however, that

this shall not apply in cases where such Designated Index Futures, etc. Clearing Participant

understands the details to be notified, or such Index Futures, etc. Non-Clearing Participant has

made such notification to JSCC pursuant to the rules of JSCC.

2. In cases where an Index Futures, etc. Non-Clearing Participant makes the notification specified

in the preceding paragraph, OSE shall receive from JSCC a notice of the close-out quantity and

the resale and repurchase quantity pertaining to such notification.

Rule 20. Payment/Receipt of Option Premium



An Index Futures, etc. Non-Clearing Participant shall, when an index options transaction based

on entrustment of brokerage for clearing of securities, etc. (including transactions for error

correction, etc.; the same shall apply hereinafter) is effected, pay/receive the option premium

to/from the Designated Index Futures, etc. Clearing Participant. In this case, the Index Futures,

etc. Non-Clearing Participant making the payment must deliver the money to the Designated

Index Futures, etc. Clearing Participant by the date and time designated by the Designated Index

Futures, etc. Clearing Participant that is before the settlement cut-off time specified by JSCC.

Rule 21. Notification of Exercise of Options

1. The exercise concerning Clearing Brokerage Long Positions on index options transactions shall

be carried out by the Index Futures, etc. Non-Clearing Participant notifying the Designated

Index Futures, etc. Clearing Participant of the quantities pertaining to the exercise of options for

each issue, classifying them into agency and proprietary accounts, by the cut-off time specified

by the Designated Index Futures, etc. Clearing Participant that is before the cut-off time

specified by JSCC; provided, however, that this shall not apply in cases where a customer has

made the notification to the Designated Index Futures, etc. Clearing Participant pursuant to the

provisions of Rule 14-2, Paragraph 1 of the Brokerage Agreement Standards, or an Index

Futures, etc. Non-Clearing Participant makes such notification to JSCC pursuant to the

provisions of JSCC.

2. An Index Futures, etc. Non-Clearing Participant may not give notification of the exercise in the

preceding paragraph on the exercise date with respect to an issue which falls under the cases

prescribed in the following items.

(1) An index put option whose exercise price is at the option settlement price or lower;

(2) An index call option whose exercise price is at the option settlement price or higher.

3. Notification of the exercise of options in Paragraph 1 relating to an issue which falls under any

of the following items on the exercise date shall be deemed to have been given even if such

notification of options is not given by the cut-off time on such day prescribed in the same

paragraph; provided, however, that this shall not apply in cases where a customer or an Index

Futures, etc. Non-Clearing Participant notifies to that effect that no exercise of options will be

effected by such cut-off time.

(1) An index put option whose exercise price exceeds the option settlement price;

(2) An index call option whose exercise price is lower than the option settlement price.

4. In cases where an Index Futures, etc. Non-Clearing Participant gives notification of an exercise

of options specified in Paragraph 1 (including the case where it is deemed that notification of an

exercise of options is given pursuant to the provisions of the preceding paragraph), OSE shall

receive from JSCC a notice of details of the exercise pertaining to such notification.

5. If a customer notifies a Designated Index Futures, etc. Clearing Participant of an exercise of



options specified in Paragraph 1 (including cases where an exercise of options deems to have

been notified pursuant to the provisions of Paragraph 3 and notification has been made that

options will not be exercised) pursuant to the provisions of Rule 14-2, Paragraph 1 of the

Brokerage Agreement Standards, a Remote Trading Participant must establish an arrangement to

understand the status of notification of an exercise of options by the customer.

Rule 22. Notice concerning Assignment of Exercise of Options

When JSCC carries out assignment of exercises of options pertaining to Clearing Brokerage

Short Positions pursuant to JSCC's rules, OSE shall receive from JSCC a notice of details

pertaining to such assignment.

Rule 23. Handling of Transactions Resulting from Exercise of Clearing Brokerage Short

Positions or Clearing Brokerage Long Positions

In the event that transactions executed resulting from the exercise of index options transactions

are related to Clearing Brokerage Short Positions or Clearing Brokerage Long Positions, these

Regulations shall apply to such transactions executed resulting from the exercise by deeming that

such transactions are executed based on entrustment of brokerage for clearing of securities, etc.

Rule 24. Payment/Receipt of Money for Settlement on Exercise of Options

When an exercise of options pertaining to Clearing Brokerage Short Positions or Clearing

Brokerage Long Positions has been effected, an Index Futures, etc. Non-Clearing Participant

shall pay/receive to/from its Designated Index Futures, etc. Clearing Participant the amount of

money equivalent to the difference between the exercise price and the option settlement price. In

such cases, an Index Futures Non-Clearing Participant making the payment must pay such

amount of money to the Designated Index Futures, etc. Clearing Participant by the date and time

designated by the Designated Index Futures, etc. Clearing Participant that is before the settlement


Rule 24-2. Special Provisions for Payment/Receipt of Money Pertaining to Remote Trading

Participant




able to make the customer and the Designated Clearing Participant pay/receive option premium

and deliver money prescribed in Rule 20 pertaining to trades entrusted by the customer and

pay/receive/deliver money prescribed in the preceding rule (hereinafter referred to as

"payment/receipt, etc. of money" in this rule and the following rule).



2. If such a customer has made payment/receipt, etc. money to/from the Designated Clearing

Participant pursuant to the provisions of the preceding paragraph, such payment/receipt, etc. of

money shall be deemed as the payment/receipt, etc. of money pursuant to the provisions of Rule

20 or the preceding rule.

Rule 24-3. Understanding Status of Payment/Receipt, etc. of Money Pertaining to Customer of

Remote Trading Participant


must establish an arrangement to understand the status of payment/receipt etc. of money between

the customer and the Designated Clearing Participant pertaining to the agreement.

Section 4

Settlement of Exchange-FX Transactions

Rule 25. Position Notice

1. An FX Non-Clearing Participant (meaning FX Non-Clearing Participants pursuant to Rule 24,

Paragraph 4 of the Trading Participant Regulations; the same shall apply hereinafter) shall

classify the number of long positions based on entrustment of agency clearing of securities, etc.

relating to Exchange-FX Transactions (hereinafter referred to as "FX Clearing Brokerage Long

Position") or the number of short positions based on entrustment of agency clearing of securities,

etc. relating to Exchange-FX Transactions (hereinafter referred to as "FX Clearing Brokerage

Short Position") according to agency and proprietary accounts, and notify the Designated FX

Clearing Participant no later than the cut-off time prescribed by the Designated FX Clearing

Participant (meaning FX Agency Clearing Participant (meaning Participant having Agency

Clearing Qualification relating to FX Clearing Qualification (meaning the FX Clearing

Qualification prescribed by the Business Rules of JSCC) designated by such FX Non-Clearing

Participant pursuant to Rule 27, Paragraph 1 of the Trading Participant Regulations; the same

shall apply hereinafter) that is before the time prescribed by JSCC; provided, however, that in the

event of resale or repurchase, the number after reduction shall be notified as the number of such

resale or repurchase relating to settlement.

2. A Non-Clearing Participant in FX transactions shall calculate and record the number for the

notice in the preceding paragraph immediately after the trading session of each trading day

(meaning the trading day prescribed in Rule 2, Item 15 of the Special Rules for Exchange-FX

Transactions; the same shall apply hereinafter in this Section).

3. In case where an FX Non-Clearing Participant has made the notification specified in the

preceding paragraph, OSE shall receive from JSCC the notification of the resale or the



repurchase relating to such notification.

Rule 26. Settlement Price and Swap Point Standard Price

1. The settlement price of Exchange-FX transactions shall be the price designated by JSCC as the

settlement price of FX transactions.

2. The swap point standard price of Exchange-FX Transactions shall be the price prescribed by

JSCC as the swap point price of Exchange-FX Transactions.

Rule 27. Payment or Receipt of Initial Mark to the Market Result

FX Non-Clearing Participants shall, if a difference arises between the contract price and the

settlement price of the trading day on which such Exchange-FX transaction contract was

executed in relation to an Exchange-FX Transaction based on entrustment of brokerage for

clearing of securities, etc. (including transactions for error correction, etc.; the same shall apply

hereinafter), and when a rollover (meaning the rollover of Rule 2, Item 17 of the Special Rules

for Exchange-FX Transactions; the same shall apply hereinafter) of positions at the close of

trading session is executed, pay to or receive from the Designated Clearing Participant in

Exchange-FX Transactions money equivalent to the amount of such difference. In such cases, the

Non-Clearing Participant in FX Transactions making the payment must deliver the money

equivalent to the amount of such difference to the Designated Clearing Participant in FX

Transactions no later than the date and time designated by such Designated Clearing Participant

in FX Transactions that is before the settlement cut-off time prescribed by the rules of JSCC.

Rule 28. Payment or Receipt of Net Difference from Previous Day

FX Non-Clearing Participants shall, if a difference arises between the settlement price on the

trading day which such positions rollover was executed at the close of trading session (excluding

the case in the preceding rule) and the settlement price on the preceding trading day in relation to

an FX transaction based on entrustment of brokerage for clearing of securities, etc., pay to or

receive from the Designated FX Clearing Participant money equivalent to the amount of such

difference. In such cases, the FX Non-Clearing Participant making the payment must deliver

money equivalent to the amount of such difference to the Designated FX Clearing Participant no

later than the date and time designated by such Designated FX Clearing Participant that is before

the settlement cut-off time prescribed by the rules of JSCC.

Rule 29. Delivery and Receipt of Swap Points

FX Non-Clearing Participants shall, when a position rollover is executed at the close of trading

session in relation to an FX transaction based on entrustment of brokerage for clearing of

securities, etc., deliver to or receive from such Designated FX Clearing Participant the money



equivalent to the amount obtained by multiplying the swap point standard price of each financial

index with the number of long positions relating to such rollover after reducing short positions

(hereinafter referred to as "swap points") no later than the date and time designated by such

Designated FX Clearing Participant that is before the settlement cut-off time prescribed by the

rules of JSCC.

Rule 30. Payment and Receipt of Settlement Balance, etc.

FX Non-Clearing Participants shall, if resale or repurchase or final settlement of position was

executed in an Exchange-FX transaction based on entrustment of brokerage for clearing of

securities, etc., pay to or receive from the Designated FX Clearing Participant the money in

accordance with the cases enumerated in the following items on the settlement day relating to the

day on which such resale or repurchase was executed or on the final settlement day. In such cases,

the FX Non-Clearing Participant must deliver such money to such Designated FX Clearing

Participant no later than the date and time designated by such Designated FX Clearing Participant

that is before the settlement cut-off time prescribed by the rules of JSCC.

(1) When such position is a contract of the trading day of such resale or repurchase:

Money equivalent to the difference between the contract price relating to such position

and the contract price relating to such resale or repurchase

(2) When such position is a contract of a trading day prior to the preceding trading day on

which such resale or repurchase was executed:

Money equivalent to the difference between the settlement price of the preceding

trading day and the contract price relating to such resale or repurchase

(3) When such position is a contract of the last trading day:

Money equivalent to the difference between the contract price relating to such position

and the final settlement price

(4) When such position is a contract of a trading day prior to the trading day preceding the

last trading day:

Money equivalent to the difference between the settlement price of the preceding

trading day and the final settlement price.

Chapter 4

Clearing Margin and Transfer of Unsettled Contracts, etc.

Rule 31. Clearing Margin and Transfer of Unsettled Contracts

1. Matters concerning clearing margin and transfer of unsettled contracts pertaining to government

bond futures transactions, index futures transactions, securities options transactions, government

bond futures options transactions, and index futures transactions (hereinafter referred to as



"futures and options transactions") shall be governed by the Rules on Margin and Transfer of

Unsettled Contracts Pertaining to Futures/Options Contract.

2. Matters concerning clearing margins and transfer of unsettled contracts pertaining to

Exchange-FX transactions shall be governed by the Rules on Margin and Transfer of Unsettled

Transactions Pertaining to Exchange-FX Margin Trading.

Chapter 5

Treatment of Unsettled Contracts

Section 1

Treatment of Unsettled Contracts in Cases of Obtainment of Clearing Qualification and

Change in Designated Clearing Participant

Rule 32. Treatment of Unsettled Contracts in Cases of Obtainment of Clearing Qualification

In cases where a Trading Participant that is a Non-Clearing Participant (meaning a Non-Clearing

Participant prescribed in Rule 24, Paragraph 5 of the Trading Participant Regulations; the same

shall apply hereinafter) newly obtains a clearing qualification (meaning Government Bond

Futures, etc. Clearing Qualification, Index Futures Clearing Qualification, or FX Clearing

Qualification; the same shall apply hereinafter), unsettled contracts of such Trading Participant

(limited to those pertaining to such clearing qualification) based on entrustment of brokerage for

clearing of securities, etc. shall be market derivatives contracts in the name of such Trading

Participant on and after the obtainment of clearing qualification.

Rule 33. Transfer of Unsettled Contracts in Cases of Change in Designated Clearing

Participant

1. In cases where, pursuant to Rule 27, Paragraph 3 of the Trading Participant Regulations, a

Non-Clearing Participant changes the Designated Clearing Participant (meaning the Designated

Clearing Participant prescribed in Paragraph 1 of the same rule; the same shall apply hereinafter),

unsettled market derivatives contracts of such Non-Clearing Participant based on entrustment of

brokerage for clearing of securities, etc. shall be, on and after the change, market derivatives

contracts based on entrustment of brokerage for clearing of securities, etc. to the Designated

Clearing Participant after the change.

2. In cases where a Clearing Participant becomes a Non-Clearing Participant, the provisions of the

preceding paragraph shall apply mutatis mutandis to the case where the designation of

Designated Clearing Participant is made pursuant to Rule 27, Paragraph 3 of the Trading

Participant Regulations. In this case "unsettled market derivatives contracts of such Trading

Participants based on entrustment of brokerage for clearing of securities, etc." shall be read as



"unsettled contracts out of the transactions of a party that becomes a Non-Clearing Participant"

and "Designated Clearing Participant after the change" shall be read as "a party that has been

newly designated as a Designated Clearing Participant".

Section 2

Treatment of Unsettled Contracts in Cases of Suspension of Market Transactions of

Derivatives or Suspension of Entrustment of Brokerage for Clearing of Securities, etc.

Rule 34. Measures against Trading Participants that are Suspended from Market

Transactions of Derivatives by Application for Waiver of Trading Qualification

If OSE suspends market transactions of derivatives (excluding transactions based on entrustment

of brokerage for clearing of securities, etc.; the same shall apply hereinafter in this section) or

entrustment of brokerage for clearing of securities, etc. in accordance with the provisions of Rule

35, Paragraph 1 of the Trading Participant Regulations, OSE may cause such applicant for waiver

of trading qualification to transfer market transactions of derivatives or transactions based on

entrustment of brokerage for clearing of securities, etc. and transactions related thereto of such

applicant for waiver of trading qualification on the OSE markets to another Trading Participant or

to make other arrangements that OSE deems necessary.

Rule 35. Settlement of Unsettled Market Derivatives Contracts of Parties Having Waived

Trading Qualification

1. In cases where a party that has waived its trading qualification has unsettled market derivatives

contracts or the contracts based on entrustment of brokerage for clearing of securities, etc.

pertaining to the type of such trading qualification on the OSE markets that are unsettled, OSE

shall cause such party itself or its general successor to undertake settlement thereof; provided,

however, that if OSE considers it inappropriate to cause such party itself or its successor to

undertake settlement, OSE may cause another Trading Participant to do so.

2. In the cases enumerated in the preceding paragraph, OSE may, when it deems necessary, cause

another Trading Participant to take over market transactions of derivatives or transactions based

on entrustment of brokerage for clearing of securities, etc. and transactions related thereto on the

OSE markets pertaining to the type of such trading qualification that are unsettled or make other

arrangements that OSE deems necessary.

3. OSE may, when it deems necessary, cause another Trading Participant to make the arrangement

prescribed in the preceding paragraph. In such cases, an entrustment agreement shall be deemed

to have been executed between such Trading Participant and the Trading Participant that is

subject to suspension from market transactions of derivatives or entrustment of brokerage for

clearing of securities, etc. enumerated in the same paragraph.



Rule 36. Measures against Trading Participants that are Suspended from Market

Transactions of Derivatives due to Insolvency

1. In the event that OSE suspends a Trading Participant from market transactions of derivatives or

entrustment of brokerage for clearing of securities, etc. on the OSE markets in accordance with

the provisions of Rule 43, Paragraph 3 of the Trading Participant Regulations, or suspends from

market transactions of derivatives as a result of being subject to measures to have its clearing

qualification revoked or to suspend it from assumption of obligations (limited to suspension from

assumption of obligations as a result of making a public notice of insolvency or abolition of

financial instruments business, or of breaching improvement instructions (meaning instructions

for improvement of its position holding pursuant to the provisions of Business Rules of JSCC;

the same shall apply hereinafter)) under the Business Rules of JSCC in accordance with the

provisions of Rule 47, Paragraph 1 of the Trading Participant Regulations, OSE may cause such

Trading Participant to transfer market transactions of derivatives or transactions under

entrustment of brokerage for clearing of securities, etc. and transactions related thereto of such

Trading Participant on the OSE markets that are unsettled to another Trading Participant or to

make other arrangements that OSE deems necessary.

2. The provisions of Paragraph 3 of the preceding rule shall apply mutatis mutandis in cases

where OSE causes a Trading Participant. to make the arrangement pursuant to the preceding

paragraph.

Rule 37. Measures against Non-Clearing Participants in Cases that Designated Clearing

Participant has its Clearing Qualification Waived

1. In the event that OSE suspends a Trading Participant that is a Non-Clearing Participant from

entrustment of brokerage for clearing of securities, etc. in accordance with the provisions of Rule

48, Paragraph 1 of the Trading Participant Regulations as a result of the Designated Clearing

Participant of such Non-Clearing Participant being subject to revocation of its clearing

qualification or suspension from assumption of obligations (limited to suspension from

assumption of obligations as a result of making a public notice of insolvency or abolition of

financial instruments business, or of breaching improvement instructions) under the Business

Rules of JSCC, OSE may cause such Trading Participant that is a Non-Clearing Participant to

transfer market transactions of derivatives, transactions based on entrustment of brokerage for

clearing and transactions related thereto of such Trading Participant that is a Non-Clearing

Participant on the OSE markets that are unsettled to another Trading Participant or to make other

arrangements that OSE deems necessary.

2. The provisions of Rule 35, Paragraph 3 shall apply mutatis mutandis in cases where OSE causes

a Trading Participant to make the arrangement pursuant to the preceding paragraph.



Rule 38. Measures against Trading Participants that are Subject to Suspension from or

Restriction on Market Transactions of Derivatives on the OSE Markets

In the event that the disciplinary action, regulatory disposition or action taken by OSE against a

Trading Participant under the Trading Participant Regulations is suspension from or restriction on

market transactions of derivatives or entrustment of brokerage for clearing of securities, etc. on

the OSE markets (excluding cases to which the provisions of Rule 34, Rule 36 or the preceding

rule apply), such Trading Participant may, with approval of OSE, during the period thereof,

transfer to another Trading Participant such Trading Participant's market transactions of

derivatives or transactions based on entrustment of brokerage for clearing of securities, etc. and

transactions relating thereto on the OSE markets that are unsettled.

Section 2-2

Transfer of Unsettled Contracts in Cases of Receiving Instructions for

Improvement of Position Holding

Rule 39. Transfer of Unsettled Contracts in Cases where Trading Participant that is

Government Bond Futures, etc. Clearing Participant, Index Futures, etc. Clearing

Participant or FX Clearing Participant Receives Improvement Instruction

1. In cases where a Trading Participant that is a Government Bond Futures, etc. Clearing

Participant, Index Futures, etc. Clearing Participant, or FX Clearing Participant receives an

improvement instruction, unsettled contracts in futures and options transactions or Exchange-FX

Transactions may be transferred to another Trading Participant with the approval of JSCC and

consent of such other Trading Participant.

2. In the cases enumerated in the preceding paragraph, if the unsettled contracts to be transferred

are those for customers' accounts, such Trading Participant that is a Government Bond Futures,

etc. Clearing Participant, Index Futures, etc. Clearing Participant, or FX Clearing Participant

shall obtain the consent of such customers for such transfer of unsettled contracts.

Section 3

Transfer of Unsettled Contracts in Cases of Demerger or Transfer of Business

Rule 40. Transfer of Unsettled Contracts in Cases of Demerger or Transfer of Business

1. In the event that a Trading Participant takes over or transfers its business to another Trading

Participant as a result of demerger, if such Trading Participant does not waive its trading

qualification at the same time as such takeover or transfer of business, it may, with the approval



of OSE, transfer unsettled contracts in market transactions of derivatives relating to such

takeover or transfer of such business to such other Trading Participant.

2. In the cases enumerated in the preceding paragraph, if the unsettled contracts to be transferred

are those for customers' accounts, such Trading Participant shall obtain the consent of such

customers for such transfer of unsettled contracts.

Chapter 6

Miscellaneous Provisions

Rule 41. Emergency Measures in Cases of Natural Disaster, etc.

1. If OSE considers that the settlement by Non-Clearing Participants of market transactions of

derivatives based on entrustment of brokerage for clearing of securities, etc. on the OSE markets

is impossible or extremely difficult due to a natural disaster, extreme change in the economic

situation, supply shortage or other unavoidable reason, OSE may stipulate new settlement

conditions for such transactions by resolution of the Board of Directors.

2. If OSE stipulates settlement conditions therefor pursuant to the preceding paragraph,

Non-Clearing Participants must follow such stipulations.

3. In the cases enumerated in Paragraph 1, OSE may stipulate new settlement conditions without

resolution of the Board of Directors when urgently necessary.

Rule 42. Change in Securities of Deliverable Grade for Government Bond Futures Trading,

etc.

Where OSE deems that it is difficult for a Government Bond Futures, etc. Non-Clearing

Participant to carry out settlement of large contracts by delivery/payment pertaining to large

contracts on the basis of entrustment of brokerage for clearing of securities, etc. in view of the

status of short or long positions, etc., OSE may take measures for changing the securities of

deliverable grade or the date of delivery/payment settlement for such large contracts.

Rule 43. Determination of Necessary Matters concerning Clearing and Settlement of Market

Transactions of Derivatives

OSE may, in addition to the matters provided in these Regulations, prescribe regulations

regarding the required interpretation thereof if necessary concerning clearing and settlement of

market transactions of derivatives on the OSE markets.

Clearing and Settlement Regulations - 日本取引所 ... · The settlement of index futures...

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